Home Buyers: Here's a Guide to Your Closing Costs

Posted by Lino Arci on Monday, August 19th, 2019 at 7:38am.


Preparing a thorough budget is one of the keys to a successful home purchase. Of course, it's not just a property's sticker price that buyers need to consider. If you're getting ready to buy your dream home, there are several other costs you'll have to cover before you can take ownership. 

By knowing what to expect financially, you can avoid being caught off guard on closing day. Here are the major costs you'll be responsible for before you can call your new living space home...


A deposit is required when you make an offer on a home. This money will count towards your down payment, and you ultimately get to decide on the amount (though higher sums are more attractive to sellers). While it's true that your deposit is due early on in the process, many buyers count it among their closing costs.

Home inspection

Most home hunters opt to have a property inspected before they make an offer on it. Like your deposit, your home inspection fee is a cost you'll pay long before closing. That said, it will likely set you back between $300 and $500—making it an expense worth budgeting for.

Land transfer tax

Every home buyer in Ontario has to pay a provincial land transfer tax. The tax exists on a sliding scale, which means the amount you're responsible for will depend on how much your property costs. The total could be anywhere between 0.5 and 2 per cent of your purchase price (though first-timers may be eligible for a rebate).

Legal fees

Sound legal advice can be incredibly helpful during the home purchase process, so it's a good idea to find a professional who's experienced in real estate law. At the very least, you'll need either a lawyer or notary to prepare the necessary documentation—a service you can expect to pay a few hundred dollars for.

Title insurance

Your lawyer may recommend that you purchase title insurance, and most lenders will require you to obtain some form of it. This coverage will protect you and your lending institution against future challenges to ownership of the property you're buying, along with other title-related issues.

Tax on CMHC insurance

If you're making a down payment lower than 20 per cent, you'll need mortgage default insurance through CMHC (Canada Mortgage and Housing Corporation). While this cost will be part of your mortgage, you'll need to pay PST on it at the time of closing.

Seller reimbursement

You'll need to reimburse the seller for any costs they've prepaid related to the home you're buying. Most commonly, these include property taxes and utilities.

The bottom line

The closing costs listed here are some of the most common, but your purchase may include others. While it's true that they won't be as significant as your purchase price, these expenses tend to add up. To avoid any unpleasant financial surprises, find out exactly which expenses you'll be responsible for—and work with an experienced agent who knows the home-buying process inside and out.

Preparing to buy a home? From the start of your search right up until closing, we can help you at every step. Get in touch to learn more about the process! If you want to learn more about first-time homebuying, visit our complete guide!

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